Hundreds of North Sea oil workers have lost the right to paid holidays on top of their shift patterns.

After five years of legal wrangling, an Employment Tribunal in Aberdeen last year ruled that 300 drilling contractors and catering staff had the right to two weeks' paid holidays.

However their employers appealed against the ruling, and Lady Smith on Monday issued her decision to uphold the employers' appeal. The employers argued that paid leave, or holidays, can and should be taken during existing field breaks.

The typical offshore worker currently works a two-week on, two-week off work cycle, a system which has been widely operated for several years.

The decision will come as a major blow to all offshore workers who have been fighting for the right to paid leave since the early 1990s. Offshore workers currently work an average of 2,200 hours per year compared to the onshore average of around 1,700.

All onshore workers irrespective of shift patterns enjoy an entitlement to paid leave of almost four weeks. The working time regulations were extended offshore in 2003 and since that date a series of tribunal hearings have taken place to determine how the regulations should be interpreted and applied.

Jake Molloy, of the Rail, Maritime and Transport Workers union, said: "Lady Smith's decision is perverse. Why would the EU and Westminster parliamentary draughtsmen spend several years tailoring legislation specifically to fit an industrial sector, which then delivers no change?

"The primary purpose of these regulations is to improve health and safety by reducing exposure to excessive working hours. Lady Smith clearly has no concept of the realities of working physically demanding 12-hour shifts in a hostile environment."

Mr Molloy said the union will discuss its next step with lawyers.

Malcolm Webb, chief executive of Oil & Gas UK, welcomed the decision with some concerns.

Mr Webb: "We have no sense of triumph today. This legal process has consumed a very great deal of effort and has cost our members well over a million pounds in legal fees and expenses.

"The unions have also spent considerable time and money and no doubt also incurred substantial legal costs. All this cost and uncertainty could have been avoided if the government had done what we repeatedly asked it to do at the outset, namely to issue UK regulations on this matter which were sensible, clear and unambiguous."

Mr Webb also called on the UK Government to focus on the priorities for the industry.

He said: "The government must act now to assist small exploration and development companies by releasing accrued exploration reliefs to them to be spent on North Sea operations and also act to take the brake off investment in our industry, which the current fiscal regime is now imposing, by eliminating supplementary corporation tax on new development projects."